Edison SpA, Italy?s second-largest power generator, had its ratings cut one level by Standard & Poor?s because of higher debt and tough market conditions.
S&P lowered the long-term corporate credit and senior unsecured debt ratings to BBB from BBB+ and changed the outlook to stable from negative.
?Increasing adjusted debt levels and difficult market conditions have weakened the credit metrics,? S&P said today in a note. Current market conditions make it unlikely that measures implemented by the company ?will be sufficient to restore Edison?s credit metrics to a level that we would consider commensurate to the previous rating.?
The ratings company said Milan-based Edison?s purchase of the Abu Qir gas field and commissioning of the Rovigo LNG terminal contributed to an increase in adjusted debt. Market conditions and the failure to renegotiate gas procurement contracts also hurt the company.
Edison reported a 54 percent slump in third-quarter profit on Oct. 26 due to the cost of gas procurement contracts that were signed when oil prices were higher. Edison said it will have to wait until next year to renegotiate the contracts because of the complexity of negotiations.
S&P said the stable outlook ?reflects our view that Edison has headroom at its current rating level.?
To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy@bloomberg.net.
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